<SUBMISSION>
<ACCESSION-NUMBER>0001045969-01-500866
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>5
<PERIOD>20010630
<FILING-DATE>20010814
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>DIAMETRICS MEDICAL INC
<CIK>0000895380
<ASSIGNED-SIC>3845
<IRS-NUMBER>411663185
<STATE-OF-INCORPORATION>MN
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>000-21982
<FILM-NUMBER>1707823
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>2658 PATTON RD
<CITY>ROSEVILLE
<STATE>MN
<ZIP>55113
<PHONE>6516398035
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>2658 PATTON ROAD
<CITY>ROSEVILLE
<STATE>MN
<ZIP>55113
</MAIL-ADDRESS>
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<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>d10q.txt
<DESCRIPTION>FORM 10-Q
<TEXT>
<PAGE>

================================================================================



                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                              __________________

                                   FORM 10-Q

                              __________________

          [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                 For the quarterly period ended June 30, 2001

                                      OR

         [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934


                              __________________


                        Commission file number 0-21982

                           Diametrics Medical, Inc.
                Incorporated pursuant to the Laws of Minnesota


                              __________________


      Internal Revenue Service -- Employer Identification No. 41-1663185

                 2658 Patton Road, Roseville, Minnesota 55113
                                (651) 639-8035

                              __________________


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes [X]  No [_]

The total number of shares of the registrant's Common Stock, $.01 par value,
outstanding on July 31, 2001, was 26,785,271.


================================================================================
<PAGE>

                           Diametrics Medical, Inc.

<TABLE>
<CAPTION>
                                                                                                             Page
                                                                                                             ----
<S>                                                                                                          <C>
Part I -- FINANCIAL INFORMATION

       Item 1.             Consolidated Financial Statements (unaudited)
                           Consolidated Statements of Operations:
                              Three Months Ended June 30, 2001 and 2000...................................     3
                              Six Months Ended June 30, 2001 and 2000.....................................     3

                           Consolidated Balance Sheets as of June 30, 2001
                            and December 31, 2000.........................................................     4

                           Consolidated Statements of Cash Flows:
                              Six Months Ended June 30, 2001 and 2000.....................................     5

                           Notes to Consolidated Financial Statements.....................................     6

       Item 2.             Management's Discussion and Analysis of Results of Operations
                           and Financial Condition........................................................     7

       Item 3.             Quantitative and Qualitative Disclosure About Market Risk.....................     11


Part II -- OTHER INFORMATION

       Item 1.             Legal Proceedings.............................................................     11
       Item 2.             Changes in Securities.........................................................     11
       Item 3.             Defaults Upon Senior Securities...............................................     11
       Item 4.             Submission of Matters to a Vote of Security Holders...........................     11
       Item 5.             Other Information.............................................................     12
       Item 6.             Exhibits and Reports on Form 8-K..............................................     12
       Signatures........................................................................................     13
</TABLE>

                                       2
<PAGE>

                        PART I - FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements (unaudited)
------------------------------------------------------

                           DIAMETRICS MEDICAL, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                           Three Months Ended                              Six Months Ended
                                                                June 30,                                       June 30,
                                                      2001                  2000                     2001                 2000
                                                  -------------         -------------            -------------        -------------
<S>                                               <C>                   <C>                      <C>                  <C>
Net sales                                          $  6,127,674          $  6,090,343             $ 11,843,568        $ 11,761,237

Cost of sales                                         4,452,860             4,441,509                8,854,013           8,711,466
                                                  -------------         -------------            -------------       -------------

    Gross profit                                      1,674,814             1,648,834                2,989,555           3,049,771
                                                  -------------         -------------            -------------       -------------

Operating expenses:
    Research and development                          1,310,865             1,253,588                2,471,567           2,362,957
    Selling, general and administrative               1,309,286             1,344,625                2,555,218           2,816,123
                                                  -------------         -------------            -------------       -------------

    Total operating expenses                          2,620,151             2,598,213                5,026,785           5,179,080
                                                  -------------         -------------            -------------       -------------

Operating loss                                         (945,337)             (949,379)              (2,037,230)         (2,129,309)


Other income (expense), net                             (81,614)               56,759                 (117,621)             93,280
                                                  -------------         -------------            -------------       -------------


Net loss                                           $ (1,026,951)         $   (892,620)            $ (2,154,851)       $ (2,036,029)
                                                  =============         =============            =============       =============

Basic and diluted net loss per common share        $      (0.04)         $      (0.03)            $      (0.08)       $      (0.08)
                                                  =============         =============            =============       =============

Weighted average number of
common shares outstanding                            26,747,261            26,598,515               26,735,071          26,303,370
                                                  =============         =============            =============       =============
</TABLE>

See accompanying notes to consolidated financial statements.


                                       3
<PAGE>

                           DIAMETRICS MEDICAL, INC.
                          CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                     June 30,           December 31,
                                                                                       2001                2000
                                                                                 ----------------    -----------------
<S>                                                                              <C>                 <C>
ASSETS
    Current assets:
      Cash and cash equivalents                                                   $    6,201,304      $     2,431,704
      Marketable securities                                                                    -            6,281,761
      Accounts receivable                                                              5,703,548            6,682,129
      Inventories                                                                      4,753,723            4,280,234
      Prepaid expenses and other current assets                                          345,148              397,406
                                                                                 ----------------    -----------------

         Total current assets                                                         17,003,723           20,073,234
                                                                                 ----------------    -----------------

    Property and equipment                                                            22,506,954           22,474,247
      Less accumulated depreciation and amortization                                 (15,638,068)         (15,137,964)
                                                                                 ----------------    -----------------

                                                                                       6,868,886            7,336,283
                                                                                 ----------------    -----------------

    Other assets                                                                         164,956              401,240
                                                                                 ----------------    -----------------

                                                                                  $   24,037,565      $    27,810,757
                                                                                 ================    =================

LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
      Accounts payable                                                            $    1,539,194      $     2,398,987
      Accrued expenses                                                                 1,337,148            1,914,409
      Other current liabilities                                                        1,216,361            1,426,140
                                                                                 ----------------    -----------------

         Total current liabilities                                                     4,092,703            5,739,536
                                                                                 ----------------    -----------------

    Long-term liabilities:
      Long-term liabilities, excluding current portion                                 7,641,988            7,472,215
      Other liabilities                                                                  414,115              414,115
                                                                                 ----------------    -----------------

         Total liabilities                                                            12,148,806           13,625,866
                                                                                 ----------------    -----------------

    Shareholders' equity:
      Common stock, $.01 par value: 45,000,000 authorized
         26,785,271 and 26,713,166 shares issued and outstanding                         267,853              267,132
      Additional paid-in capital                                                     147,467,129          147,291,259
      Accumulated deficit                                                           (134,166,422)        (132,011,571)
      Accumulated other comprehensive loss                                            (1,679,801)          (1,361,929)
                                                                                 ----------------    -----------------

         Total shareholders' equity                                                   11,888,759           14,184,891
                                                                                 ----------------    -----------------

                                                                                  $   24,037,565      $    27,810,757
                                                                                 ================    =================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       4
<PAGE>

                           DIAMETRICS MEDICAL, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                          Six Months Ended
                                                                                              June 30,
                                                                                       2001                2000
                                                                                 ----------------    ----------------
<S>                                                                              <C>                 <C>
Cash flows from operating activities:
    Net loss                                                                       $  (2,154,851)      $  (2,036,029)
    Adjustments to reconcile net loss to net
      cash used in operating activities:
      Depreciation and amortization                                                    1,244,799             971,286
      Other                                                                                1,506                (102)
      Changes in operating assets and liabilities:
         Accounts receivable                                                             978,581           1,256,551
         Inventories                                                                    (473,489)            608,803
         Prepaid expenses and other current assets                                        52,258            (280,470)
         Accounts payable                                                               (859,793)           (486,563)
         Accrued expenses                                                               (577,261)           (653,113)
         Deferred credits and revenue                                                   (250,365)         (1,699,354)
                                                                                 ----------------    ----------------
           Net cash used in operating activities                                      (2,038,615)         (2,318,991)
                                                                                 ----------------    ----------------

Cash flows from investing activities:
    Purchases of property and equipment                                                 (701,688)         (1,646,559)
    Purchases of marketable securities                                                (3,569,950)        (11,773,188)
    Proceeds from maturities of marketable securities                                  9,851,711          12,257,747
    Other                                                                                 (1,100)                701
                                                                                 ----------------    ----------------
           Net cash provided by (used in) investing activities                         5,578,973          (1,161,299)
                                                                                 ----------------    ----------------
Cash flows from financing activities:
    Principal payments on borrowings                                                    (276,951)           (180,907)
    Proceeds from borrowings                                                             487,310             115,846
    Net proceeds from the issuance of common stock                                       176,591           3,486,414
                                                                                 ----------------    ----------------
           Net cash provided by financing activities                                     386,950           3,421,353
                                                                                 ----------------    ----------------


Effect of exchange rate changes on cash and cash equivalents                            (157,708)           (123,488)
                                                                                 ----------------    ----------------

           Net increase (decrease) in cash and cash equivalents                        3,769,600            (182,425)

Cash and cash equivalents at beginning of period                                       2,431,704           2,786,162
                                                                                 ----------------    ----------------

Cash and cash equivalents at end of period                                         $   6,201,304       $   2,603,737
                                                                                 ================    ================

Supplemental disclosure of cash flow information:
    Cash paid during the period for interest                                       $     285,353       $     297,446
                                                                                 ================    ================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       5
<PAGE>

                           DIAMETRICS MEDICAL, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 June 30, 2001
                                  (UNAUDITED)

(1)  UNAUDITED FINANCIAL STATEMENTS

     The interim consolidated financial statements of Diametrics Medical, Inc.
     (the "Company") are unaudited and have been prepared by the Company in
     accordance with accounting principles generally accepted in the United
     States of America for interim financial information, pursuant to the rules
     and regulations of the Securities and Exchange Commission. Pursuant to such
     rules and regulations, certain financial information and footnote
     disclosures normally included in the financial statements have been
     condensed or omitted. However, in the opinion of management, the financial
     statements include all adjustments, consisting of normal recurring
     accruals, necessary for a fair presentation of the interim periods
     presented. Operating results for these interim periods are not necessarily
     indicative of results to be expected for the entire year, due to seasonal,
     operating and other factors.

     These statements should be read in conjunction with the financial
     statements and related notes which are incorporated by reference in the
     Company's Annual Report on Form 10-K for the year ended December 31, 2000.

(2)  COMPREHENSIVE LOSS

<TABLE>
<CAPTION>
                                                             Three Months Ended                     Six Months Ended
                                                                  June 30,                              June 30,
                                                           2001              2000               2001               2000
                                                      ---------------   ----------------   ----------------   ----------------
<S>                                                   <C>               <C>                <C>                <C>
Net loss                                                 $(1,026,951)       $  (892,620)       $(2,154,851)       $(2,036,029)
Change in cumulative translation adjustment                  (88,819)          (254,203)          (317,872)          (276,331)
                                                      ---------------   ----------------   ----------------   ----------------
Comprehensive loss                                       $(1,115,770)       $(1,146,823)       $(2,472,723)       $(2,312,360)
                                                      ---------------   ----------------   ----------------   ----------------
</TABLE>

(3)  INVENTORIES

<TABLE>
<CAPTION>
                                                          June 30,        December 31,
                                                            2001             2000
                                                      ---------------   ---------------
<S>                                                   <C>               <C>
Raw materials                                            $ 1,926,095       $ 1,735,460
Work-in-process                                            1,234,283         1,320,521
Finished goods                                             1,593,345         1,224,253
                                                      ---------------   ---------------
                                                         $ 4,753,723       $ 4,280,234
                                                      ---------------   ---------------
</TABLE>

(4)  OTHER CURRENT LIABILITIES

<TABLE>
<CAPTION>
                                                         June 30,        December 31,
                                                           2001              2000
                                                     ----------------  ----------------
<S>                                                  <C>               <C>
Deferred research and development funding                $   750,000       $   833,334
Current portion of long-term debt                            466,361           425,775
Other                                                              -           167,031
                                                     ----------------  ----------------
                                                         $ 1,216,361       $ 1,426,140
                                                     ----------------  ----------------
</TABLE>


     The Company's distribution agreement with Agilent Technologies, Inc.
     ("Agilent") provides for prepaid funding of research and development costs
     over the initial term of the agreement. These prepayments are being
     recognized ratably over the periods earned.

                                       6
<PAGE>

(5)  RELATED PARTY TRANSACTIONS

     One of the Company's directors is also a director of DVI, Inc., a health
     care finance company with which the Company has a credit line, outstanding
     notes payable and a capital lease. As of June 30, 2001, there were no
     outstanding advances against the $1,000,000 receivable-backed credit line
     and the outstanding balance of the notes payable and capital lease debt
     totaled $324,713 and $400,993, respectively.

     The Company's exclusive distributors, Agilent and Codman & Shurtleff, a
     Johnson & Johnson company ("Codman"), are shareholders of the Company.
     Sales to these parties were approximately $5.8 million and $10.9 million
     for the three and six months ended June 30, 2001, compared to $5.4 million
     and $10.2 million for the same periods in the prior year. Outstanding
     accounts receivable for these distributors represented 93% and 89% of total
     outstanding accounts receivable as of June 30, 2001 and December 31, 2000,
     respectively.

(6)  EFFECT OF NEW ACCOUNTING STANDARDS

     In July 2001, the Financial Accounting Standards Board ("FASB") issued
     Statement of Financial Accounting Standards ("SFAS") No. 141 "Business
     Combinations," and SFAS No. 142 "Goodwill and Other Intangible Assets,"
     which change the accounting for business combinations and goodwill. SFAS
     No. 141 requires that the purchase method of accounting be used for
     business combinations initiated after June 30, 2001. Use of the
     pooling-of-interests method will be prohibited. SFAS No. 142 changes the
     accounting for goodwill from an amortization method to an impairment-only
     approach. Amortization of goodwill, including goodwill recorded in past
     business combinations, will therefore cease upon adoption of the Statement,
     which for the Company will be January 1, 2002. The Company has evaluated
     SFAS No. 141 and SFAS No. 142, and has concluded that they do not have a
     material effect on its financial statements.

     Item 2. Management's Discussion and Analysis of Results of Operations and
     -------------------------------------------------------------------------
     Financial Condition
     -------------------

     The Company's discussion and analysis of results of operations and
     financial condition, including statements regarding the Company's
     expectations about new and existing products, future financial performance,
     market risk exposure and other forward looking statements are subject to
     various risks and uncertainties, including, without limitation, demand and
     acceptance of new and existing products, technological advances and product
     obsolescence, competitive factors, stability of domestic and international
     financial markets and economies, the performance of the Company's
     distributors and the availability of capital to finance growth. These and
     other risks are discussed in greater detail in Exhibit 99 to the Company's
     Form 10-K filed with the U.S. Securities and Exchange Commission, with
     respect to the Company's fiscal year ended December 31, 2000. When used in
     the Form 10-Q, and in future filings by the Company with the Securities and
     Exchange Commission, in the Company's press releases, presentations to
     securities analysts or investors, in oral statements made by or with the
     approval of an executive officer of the Company, the words or phrases
     "believes," "may," "will," "expects," "should," "continue," "anticipates,"
     "intends," "will likely result," "estimates," "projects," or similar
     expressions and variations thereof are intended to identify such
     forward-looking statements.

     SUMMARY
     -------

     Diametrics Medical, Inc., which began operations in 1990, is engaged in the
     development, manufacture and commercialization of critical care blood and
     tissue analysis systems, which provide immediate or continuous diagnostic
     results at the point-of-patient care.

     Since its commencement of operations in 1990, the Company has transitioned
     from a development stage company to a full-scale development, manufacturing
     and marketing organization. As of June 30, 2001, the primary funding for
     the operations of the Company has been approximately $148

                                       7
<PAGE>

     million raised through public and private sales of its equity securities
     and issuance of convertible promissory notes.

     The Company's strategy for distribution and commercialization of its
     products includes partnerships with Agilent and Codman. In October 1998,
     the Company entered into an exclusive distribution agreement with Codman
     for worldwide market development and distribution of the Company's
     Neurotrend(TM) Cerebral Tissue Monitoring System. The term of the agreement
     is six years and is renewable for two years. If minimum sales levels and
     marketing expenditure levels are not achieved by Codman, certain payments
     will be due to the Company. Also, Codman has the right of first refusal to
     market new continuous monitoring products developed for the neuro market.
     In June 1999, the Company entered into an exclusive distribution agreement
     with Hewlett Packard Company ("HP"). Under the terms of the distribution
     agreement, the Company transferred full responsibility for marketing, sales
     and distribution of the Company's leading critical care products, the
     IRMA(R)SL blood analysis system and the Trendcare(R) continuous blood gas
     monitoring systems, including Paratrend(R) and Neotrend(TM), to HP.
     Concurrently with the execution of the agreement, HP made a $9.5 million
     equity investment in the Company. In addition to HP's equity investment,
     the agreement also provides for minimum purchase commitments, market
     development commitments, research and development funding and royalty
     payments over the initial three and a half-year term. In November 1999, HP
     assigned the distribution agreement and its equity investment in the
     Company to Agilent, a leading provider of test and measurement solutions
     and communications components, which was formed as a new company and
     subsidiary of HP. HP completed the spin-off of its ownership in Agilent to
     HP shareholders in June 2000. In August 2001, Agilent completed the sale of
     its healthcare business to Royal Philips Electronics. Included in the sale
     was Agilent's equity investment in the Company. Also as part of this
     transaction, the distribution agreement between the Company and Agilent was
     assigned to Philips Medical Systems, a division of Royal Philips
     Electronics.

     RESULTS OF OPERATIONS
     ---------------------

     Sales. Sales of the Company's products were $6,127,674 and $11,843,568 for
     the three and six months ended June 30, 2001, compared to $6,090,343 and
     $11,761,237 for the same periods in the prior year, an increase of 1% for
     both the three and six month periods. The increase in sales for the three
     and six months ended June 30, 2001 over the prior year reflects a 27% and
     23% respective growth in disposable cartridge and sensor revenue and a 3%
     and 5% respective increase in instrument revenue, partially offset by a
     decrease in royalty revenue under the Agilent distribution agreement of
     $500,000 and $950,000, respectively. Comparable unit sales of disposable
     cartridges and sensors increased 49% and 44%, while unit sales of
     instruments increased 32% and 29% for the three and six months ended June
     30, 2001. The smaller increase in revenue growth relative to unit sales
     growth was due to the impact of a lower ratio of continuous monitoring
     product line sales, which have higher average selling prices, relative to
     total sales. Continuous monitoring products represented 44% and 40% of
     total sales for the three and six months ended June 30, 2001, compared to
     62% and 59% for the comparable periods in 2000. Intermittent testing
     products comprised the remaining sales in each period.

     The Company's direct sales to Agilent and Codman comprised approximately
     95% and 92% of total sales for the three and six months ended June 30,
     2001, compared to 90% and 87% for the same periods in the prior year.

     Intermittent blood testing products revenue was comprised of 70% and 71%
     instrument related revenue and 30% and 29% disposable cartridge related
     revenue for the three and six months ended June 30, 2001, respectively.
     Continuous monitoring products revenue was comprised of 68% and 69%
     instrument related revenue and 32% and 31% disposable sensor revenue for
     the three and six months ended June 30, 2001, respectively. The Company's
     revenues are affected principally by the number of instruments, both
     monitors and IRMA analyzers, placed with customers and the rate at which
     disposable sensors and cartridges are used in connection with these
     products. As of June 30, 2001, the Company has sold approximately 9,100
     instruments. As the Company grows, it is expected that the Company's
     growing end-user customer base will increase

                                       8
<PAGE>

     the usage and rate of usage of disposable products, with the result that
     overall disposable product sales will exceed that of instrument sales.

     Cost of Sales. Cost of sales totaled $4,452,860 and $8,854,013, or 73% and
     75% of revenue for the three and six months ended June 30, 2001, compared
     to $4,441,509 and $8,711,466 or 73% and 74% of revenue for the same periods
     in the prior year. While comparable between periods, cost of sales as a
     percentage of revenue in the current year periods reflects a lower ratio of
     continuous monitoring product line sales (which currently have higher gross
     margins than the intermittent testing product line) to total sales and a
     reduction in royalty revenue, partially offset by lower disposable unit
     manufacturing costs resulting from increased unit sales volumes and
     improved yields; a reduction in instrument material costs; and the impact
     of operational efficiencies and process improvements.

     Operating Expenses. Research and development expenditures totaled
     $1,310,865 and $2,471,567 for the three and six months ended June 30, 2001,
     compared to $1,253,588 and $2,362,957 for the same periods in 2000.
     Expenses in the first six months of 2001 reflect the impact of additional
     investments initiated throughout 2000 to support new research and
     development projects.

     Selling, general and administrative expenses totaled $1,309,286 and
     $2,555,218 for the three and six months ended June 30, 2001, compared to
     $1,344,625 and $2,816,123 for the same periods in 2000. The reduction in
     expenses in both the quarterly and year-to-date periods was impacted by a
     reduction in compensation costs, and the decrease in the year-to-date
     period was further impacted by the transfer of most of the Company's sales
     and marketing activities to Agilent for the IRMA and Trendcare product
     lines.

     Other Income (Expense). Net other expense totaled $81,614 and $117,621 for
     the three and six months ended June 30, 2001, compared to net other income
     of $56,759 and $93,280 for the same periods in 2000. The Company realized
     interest income of $78,080 and $202,584 for the three and six months ended
     June 30, 2001, compared to $217,576 and $418,594 for the same periods in
     2000. The period-to-period decrease in interest income reflects the impact
     of lower average cash and investment balances and lower average interest
     rates.

     Interest expense totaled $144,034 and $285,353 for the three and six months
     ended June 30, 2001, compared to $147,372 and $297,446 for the same periods
     in 2000. The period-to-period decrease reflects the impact of lower average
     debt balances.

     Net Loss. The net loss for the three and six months ended June 30, 2001 was
     $1,026,951 and $2,154,851, compared to $892,620 and $2,036,029 for the same
     periods in 2000. Compared to the three and six months ended June 30, 2000,
     the net loss increased by 15% and 6%, respectively, for the same periods in
     2001. While the Company's net loss increased between periods, the operating
     loss declined slightly due to the net favorable impact of changes in gross
     margin and operating expenses discussed above. The primary contributor,
     therefore, to the increase in net loss was the reduction in interest income
     discussed above.

     The Company is currently operating in an environment with uncertainties and
     changes that will impact 2001 financial results. These include the initial
     impact of new product introductions on sales of existing hardware product
     lines, the impact on sales of reduced capital spending in the healthcare
     sector, the general slowdown of the U.S. economy, and the impact of a
     transition of the IRMA and Trendcare distribution channel as a result of
     the sale of Agilent's healthcare business to Royal Philips Electronics in
     August 2001. Revenue and gross profit levels in 2001 will depend in part on
     the impact of the above as well as revenue mix. Pending resolution of these
     uncertainties, the Company has limited visibility to its financial
     performance for the remaining quarters of 2001.

                                       9
<PAGE>

     LIQUIDITY AND CAPITAL RESOURCES
     -------------------------------

     At June 30, 2001, the Company had working capital of $12,911,020, a
     decrease of $1,422,678 from the working capital reported at December 31,
     2000. The decrease is impacted primarily by the year-to-date net loss
     before depreciation and amortization of approximately $910,000 and
     purchases of property and equipment of approximately $702,000, partially
     offset by net proceeds from borrowing activities of approximately $210,000.

     Net cash used in operating activities totaled $2,038,615 for the six months
     ended June 30, 2001, compared to $2,318,991 for the same period in 2000.
     This was the result of net losses of $2,154,851 and $2,036,029 for these
     same periods in 2001 and 2000, respectively, adjusted by changes in key
     operating assets and liabilities, primarily accounts receivable,
     inventories, accounts payable, accrued expenses and deferred credits and
     revenue.

     Net accounts receivable decreased $978,581 for the six months ended June
     30, 2001, compared to a $1,256,551 decrease for the same period in 2000.
     With a comparable level of sales between periods, the smaller reduction in
     accounts receivable in the first six months of 2001 relative to the
     decrease for the same period in 2000 occurred in spite of an improvement in
     days sales outstanding due to the timing of sales.

     Inventories increased $473,489 for the six months ended June 30, 2001,
     after a decrease of $608,803 for the six months ended June 30, 2000. The
     increase in 2001 was primarily due to an increase in continuous monitoring
     instrument inventory, resulting from lower than anticipated sales of these
     products during the first six months of 2001 and an increase in
     intermittent blood testing raw materials inventory to ramp up for third
     quarter production. The decrease in 2000 was primarily due to an
     improvement in inventory turnover, due to improved inventory management.

     Accounts payable and accrued expenses decreased $1,437,054 and $1,139,676
     for the six months ended June 30, 2001 and 2000, respectively. The larger
     decrease in 2001 was primarily due to the timing of vendor payments.

     Deferred credits and revenue decreased $250,365 and $1,699,354 during the
     six months ended June 30, 2001 and 2000, respectively, representing the
     recognition of funding from Agilent for research and development costs and
     royalty payments.

     Net cash provided by investing activities totaled $5,578,973 for the six
     months ended June 30, 2001, compared to net cash used in investing
     activities of $1,161,299 for the same period in 2000. This change was
     affected primarily by the amounts and timing of equity funding, funding
     received from Agilent and operating cash flow requirements, which all
     affected the amount of cash available for the purchase of marketable
     securities. Purchases of property and equipment, totaling $701,688 in 2001
     and $1,646,559 in 2000, also affected net cash used in investing activities
     in each period. In 2001, the Company expects capital expenditures and new
     lease commitments to range from $1 to $1.5 million, primarily reflecting
     investments to support new product development and production.

     Net cash provided by financing activities totaled $386,950 and $3,421,353
     for the six months ended June 30, 2001 and 2000, respectively. In 2001, net
     cash provided by financing activities consisted primarily of net proceeds
     from borrowings and proceeds from employee stock plans. In 2000, net cash
     provided by financing activities consisted primarily of proceeds from
     employee stock plans and warrant exercises.

     At June 30, 2001, the Company had U.S. tax net operating loss and research
     and development tax credit carryforwards for income tax purposes of
     approximately $120 million and $1.3 million, respectively. Pursuant to the
     Tax Reform Act of 1986, use of a portion of the Company's net operating
     loss carryforwards are limited due to a "change in ownership." If not used,
     these net operating loss carryforwards begin to expire in 2005. The
     Company's foreign subsidiary also has a net operating loss carryforward of
     approximately $47 million, which can be carried forward indefinitely,
     subject to review by the governmental taxing authority.

                                       10
<PAGE>

     The Company believes currently available funds and cash generated from
     projected operating revenues, supplemented by proceeds from employee stock
     plans, warrant exercises, asset-based credit, and research and development
     funding from Agilent, will meet the Company's currently anticipated working
     capital needs. If the amount or timing of funding from these sources or
     cash requirements vary materially from those currently planned, the Company
     could require additional capital. The Company's long-term capital
     requirements will depend upon numerous factors, including the rate of
     market acceptance of the Company's products and the level of resources
     devoted to expanding the Company's business and manufacturing capabilities,
     and the level of research and development activities. While there can be no
     assurance that adequate funds will be available when needed or on
     acceptable terms, management believes that the Company will be able to
     raise adequate funding if needed.

     Item 3.  Quantitative and Qualitative Disclosure About Market Risk
     ------------------------------------------------------------------

     The Company's primary market risk exposure is foreign exchange rate
     fluctuations of the British pound sterling to the U.S. dollar as the
     financial position and operating results of the Company's U.K. subsidiary,
     Diametrics Medical, Ltd., are translated into U.S. dollars for
     consolidation. The Company's exposure to foreign exchange rate fluctuations
     also arises from transferring funds to its U.K. subsidiary in British
     pounds sterling. Effective November 1, 1999 most of the Company's sales are
     made to distributors and denominated in U.S. dollars, thereby significantly
     mitigating the risk of exchange rate fluctuations on trade receivables. The
     Company does not currently use derivative financial instruments to hedge
     against exchange rate risk or manage interest rate risk. The Company's
     exposure to interest rate risk is limited to short-term borrowings under
     its $1,000,000 receivable backed credit line and a bank loan. Based upon
     currently available information, management does not believe that the
     effect of foreign exchange rate fluctuations and interest rate risk will
     have a material impact on the Company's financial condition or overall
     trends in results of operations. There have been no material changes in
     market risk faced by the Company from what has been previously reported in
     the Company's Annual Report on Form 10-K for the year ended December 31,
     2000.

                          PART II - OTHER INFORMATION

     Item 1.      Legal Proceedings

         None

     Item 2.      Changes in Securities

         None

     Item 3.      Defaults Upon Senior Securities

         None

     Item 4.      Submission of Matters to a Vote of Security Holders

         The Annual Meeting of the Company's shareholders was held on May 23,
         2001. At the meeting, shareholders voted on the reelection of three
         directors. Each of the directors was reelected by a vote as follows:
         Gerald L. Cohn and Mark B. Knudson, Ph.D. each received 21,540,894
         votes "For" and 1,165,188 votes "Against" and Carl S. Goldfischer, M.D.
         received 21,532,591 votes "For" and 1,173,491 votes "Against". The term
         for Dr. Goldfischer will expire at the Company's Annual Meeting in 2003
         and the terms for Mr. Cohn and Dr. Knudson will expire at the Company's
         Annual Meeting in 2004.

         In addition, the Company's shareholders voted on an amendment to the
         Company's Articles of Incorporation to increase the number of
         authorized shares of all classes of stock from

                                       11
<PAGE>

         40,000,000 to 50,000,000, and to increase the number of authorized
         shares of Common Stock from 35,000,000 to 45,000,000. The amendment was
         approved as follows: 14,531,029 votes "For", 640,078 votes "Against"
         and 19,992 votes "Abstained".

         The Company's shareholders also voted to increase the number of shares
         authorized for issuance under the Company's 1990 Stock Option Plan,
         1993 Directors' Stock Option Plan and 1995 Employee Stock Purchase
         Plan. These amendments were approved as follows: 1990 Stock Option
         Plan: 16,948,306 votes "For", 5,726,785 votes "Against" and 30,991
         votes "Abstained"; 1993 Directors' Stock Option Plan: 18,600,282 votes
         "For", 4,076,494 votes "Against" and 29,306 votes "Abstained"; 1995
         Employee Stock Purchase Plan: 22,160,628 votes "For", 518,412 votes
         "Against" and 27,042 votes "Abstained".

     Item 5.      Other Information

         None

     Item 6.      Exhibits and Reports on Form 8-K

         a.       Exhibits

         Exhibit                                                     Method
         No.                        Description                     of Filing
         ---                        -----------                     ---------

          3.1      Articles of Amendment to the Articles of
                   Incorporation of the Company                   Filed herewith

         10.1      1990 Stock Option Plan, as amended and
                   restated                                       Filed herewith

         10.2      1993 Directors' Stock Option Plan, as amended
                   and restated                                   Filed herewith

         10.3      1995 Employee Stock Purchase Plan, as amended
                   and restated                                   Filed herewith

         b.       Reports on Form 8-K.

                  On April 24, 2001, the Company filed a Current Report on Form
                  8-K under Item 9 relating to the Company's announcement
                  regarding preliminary earnings results for the first quarter
                  of 2001 as presented in a press release on April 20, 2001.

                                       12
<PAGE>

                           DIAMETRICS MEDICAL, INC.



SIGNATURE
---------

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



DIAMETRICS MEDICAL, INC.




By: /s/ Laurence L. Betterley
    -----------------------------------------
        Laurence L. Betterley
        Senior Vice President
        and Chief Financial Officer
        (and Duly Authorized Officer)





Dated:   August 14, 2001

                                       13

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.1
<SEQUENCE>3
<FILENAME>dex31.txt
<DESCRIPTION>AMENDED ARTICLES OF INCORPORATION
<TEXT>
<PAGE>

                                                                     Exhibit 3.1

                              ARTICLES OF AMENDMENT
                                       TO
                 AMENDED AND RESTATED ARTICLES OF INCORPORATION
                                       OF
                            DIAMETRICS MEDICAL, INC.

1.   The name of the corporation is Diametrics Medical, Inc.

2.   The following is the full and complete text of the first paragraph of
Article 3 of the Amended and Restated Articles of Incorporation of Diametrics
Medical, Inc., as amended:

     "The total number of shares of capital stock which the corporation is
authorized to issue shall be 50,000,000 shares, consisting of 45,000,000 shares
of common stock, par value $.01 per share ("Common Stock"), and 5,000,000 shares
of preferred stock, par value $.01 per share ("Preferred Stock")."

3.   The foregoing amendment has been adopted pursuant to Chapter 302A of the
Minnesota Business Corporation Act.

     IN WITNESS WHEREOF, the undersigned, the Secretary of Diametrics Medical,
Inc., being duly authorized on behalf of Diametrics Medical, Inc., has executed
this document on this 19th of July, 2001.



                                           /s/ Kenneth L. Cutler
                                           Secretary

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>4
<FILENAME>dex101.txt
<DESCRIPTION>1990 STOCK OPTION PLAN AS AMENDED & RESTATED
<TEXT>
<PAGE>

                                                                    Exhibit 10.1

                           DIAMETRICS MEDICAL, INC.
                             AMENDED AND RESTATED
                            1990 STOCK OPTION PLAN
                           (as amended May 23, 2001)

1.   Purpose of Plan.
--------------------

     This Plan shall be known as the "DIAMETRICS MEDICAL, INC. 1990 STOCK OPTION
PLAN" and is hereinafter referred to as the "Plan." The purpose of the Plan is
to aid in maintaining and developing personnel capable of assuring the future
success of Diametrics Medical, Inc., a Minnesota corporation (the "Company"), to
offer such personnel additional incentives to put forth maximum efforts for the
success of the business, and to afford them an opportunity to acquire a
proprietary interest in the Company through stock options and other long-term
incentive awards as provided herein. Options granted under this Plan may be
either incentive stock options ("Incentive Stock Options") within the meaning of
Section 422 of the Internal Revenue Code of 1986 (the "Code"), or options which
do not qualify as Incentive Stock Options. Awards granted under this Plan shall
be SARs, restricted stock or performance awards as hereinafter described.

2.   Stock Subject to Plan.
--------------------------

     Subject to the provisions of Section 15 hereof, the stock to be subject to
options or other awards under the Plan shall be the Company's authorized but
unissued shares of Common Stock, par value $.01 per share. Such shares may be
either authorized but unissued shares, or issued shares which have been
reacquired by the Company. Subject to adjustment as provided in Section 15
hereof, the maximum number of shares on which options may be exercised or other
awards issued under this Plan shall be 4,450,000 shares. If an option or award
under the Plan expires, or for any reason is terminated or unexercised with
respect to any shares, such shares shall again be available for options or
awards thereafter granted during the term of the Plan.

3.   Administration of Plan.
---------------------------

     (a)  The Plan shall be administered by a committee (the "Committee") of two
or more members of the Board of Directors of the Company, none of whom shall be
officers or employees of the Company and all of whom shall be "disinterested
persons" with respect to the Plan within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
successor rule or regulation thereto. The members of any such committee shall be
appointed by and serve at the pleasure of the Board of Directors.

     (b)  The Committee shall have plenary authority in its discretion, but
subject to the express provisions of the Plan: (i) to determine the purchase
price of the Common Stock covered by each option or award, (ii) to determine the
employees to whom and the time or times at which such options and awards shall
be granted and the number of shares to be subject to each, (iii) to

                                      -1-
<PAGE>

determine the form of payment to be made upon the exercise of an SAR or in
connection with performance awards, either cash, Common Stock of the Company or
a combination thereof, (iv) to determine the terms of exercise of each option
and award, (v) to accelerate the time at which all or any part of an option or
award may be exercised, (vi) to amend or modify the terms of any option or award
with the consent of the optionee, (vii) to interpret the Plan, (viii) to
prescribe, amend and rescind rules and regulations relating to the Plan, (ix) to
determine the terms and provisions of each option and award agreement under the
Plan (which agreements need not be identical), including the designation of
those options intended to be Incentive Stock Options, and (x) to make all other
determinations necessary or advisable for the administration of the Plan,
subject to the exclusive authority of the Board of Directors under Section 16
herein to amend or terminate the Plan.

     (c)  The Committee shall select one of its members as its Chairman and
shall hold its meetings at such times and places as it may determine. A majority
of its members shall constitute a quorum, provided that if the Committee is
comprised of no more than two members, all of its members must be present to
constitute a quorum. All determinations of the Committee shall be made by not
less than a majority of its members, provided that if the Committee is comprised
of no more than two members, such determinations may not be made by less than
all of its members. Any decision or determination reduced to writing and signed
by all of the members of the Committee shall be fully effective as if it had
been made by a majority vote at a meeting duly called and held. The grant of an
option or award shall be effective only if a written agreement shall have been
duly executed and delivered by and on behalf of the Company following such
grant. The Committee may appoint a Secretary and may make such rules and
regulations for the conduct of business as it shall deem advisable.

     (d)  The Chief Executive Officer of the Company shall have the authority,
as granted by the Committee pursuant to clause (ix) of subsection (b) of this
Section 3, to grant, pursuant to the Plan, options or other awards to eligible
persons who are not considered by the Company as its officers or directors for
purposes of Section 16 of the Securities Exchange Act of 1934, as amended. The
Chief Executive Officer of the Company shall provide information as to any
grants made pursuant to this subsection to the Committee at their next meeting.

4.   Eligibility.
----------------

     Incentive Stock Options may only be granted under this Plan to any full or
part-time employee (which term as used herein includes, but is not limited to,
officers and directors who are also employees) of the Company and of its present
and future subsidiary corporations within the meaning of Section 424(f) of the
Code (herein called "subsidiaries"). Full or part-time employees, consultants or
independent contractors to the Company or one of its subsidiaries shall be
eligible to receive options which do not qualify as Incentive Stock Options and
awards. In determining the persons to whom options and awards shall be granted
and the number of shares subject to each, the Committee may take into account
the nature of services rendered by the respective employees or consultant their
present and potential contributions to the success of the Company and such other
factors as the Committee in its discretion shall deem relevant. A person

                                      -2-
<PAGE>

who has been granted an option or award under this Plan may be granted
additional options or awards under the Plan if the Committee shall so determine;
provided, however, that for Incentive Stock Options granted after December 31,
1986, to the extent the aggregate fair market value (determined at the time the
Incentive Stock Option is granted) of the Common Stock with respect to which all
Incentive Stock Options are exercisable for the first time by an employee during
any calendar year (under all plans described in subsection (d) of Section 422 of
the Code of his employer corporation and its parent and subsidiary corporations)
exceeds $100,000, such options shall be treated as options which do not qualify
as Incentive Stock Options. Nothing in the Plan or in any agreement thereunder
shall confer on any employee any right to continue in the employ of the Company
or any of its subsidiaries or affect, in any way, the right of the Company or
any of its subsidiaries to terminate his or her employment at any time.

5.   Price.
----------

     The option price for all Incentive Stock Options granted under the Plan
shall be determined by the Committee but shall not be less than 100% of the fair
market value of the Common Stock at the date of grant of such option. The option
price for options granted under the Plan which do not qualify as Incentive Stock
Options and, if applicable, the price for all awards shall also be determined by
the Committee. For purposes of the preceding sentence and for all other
valuation purposes under the Plan, the fair market value of shares of Common
Stock shall be (i) the closing price of the Common Stock as reported for
composite transactions if the Common Stock is then traded on a national
securities exchange, (ii) the last sale price if the Common Stock is then quoted
on the NASDAQ National Market System, or (iii) the average of the closing
representative bid and asked prices of the Common Stock as reported on NASDAQ on
the date as of which the fair market value is being determined. If on the date
of grant of any option or award hereunder the Common Stock is not traded on an
established securities market, the Committee shall make a good faith attempt to
satisfy the requirements of this Section 5 and in connection therewith shall
take such action as it deems necessary or advisable.

6.   Term.
---------

     Each option and award and all rights and obligations thereunder shall
expire on the date determined by the Committee and specified in the option or
award agreement. The Committee shall be under no duty to provide terms of like
duration for options or awards granted under the Plan, but the term of an
Incentive Stock Option may not extend more than ten (10) years from the date of
grant of such option and the term of options granted under the Plan which do not
qualify as Incentive Stock Options may not extend more than fifteen (15) years
from the date of granting of such option.

7.   Exercise of Option or Award.
--------------------------------

     (a)  The Committee shall have full and complete authority to determine
whether an option or award will be exercisable in full at any time or from time
to time during the term thereof, or to provide for the exercise thereof in such
installments, upon the occurrence of such

                                      -3-
<PAGE>

events (such as termination of employment for any reason) and at such times
during the term of the option as the Committee may determine and specify in the
option or award agreement.

     (b)  The exercise of any option or award granted hereunder shall only be
effective at such time that the sale of Common Stock pursuant to such exercise
will not violate any state or federal securities or other laws. Only to the
extent required in order to comply with Rule 16b-3 under the Exchange Act, in
the case of an option or other award granted to a person considered by the
Company as one of its officers or directors for purposes of Section 16 of the
Exchange Act, the terms of the option or other award will require that such
shares are not disposed of by such officer or director for a period of at least
six months from the date of grant.

     (c)  An optionee or grantee electing to exercise an option or award shall
give written notice to the Company of such election and of the number of shares
subject to such exercise. The full purchase price of such shares shall be
tendered with such notice of exercise. Payment shall he made to the Company in
cash (including bank check, certified check, personal check, or money order),
or, at the discretion of the Committee and as specified by the Committee, (i) by
delivering certificates for the Company's Common Stock already owned by the
optionee or grantee having a fair market value as of the date of grant equal to
the full purchase price of the shares, or (ii) by delivering the optionee's or
grantee's promissory note, which shall provide for interest at a rate not less
than the minimum rate required to avoid the imputation of income, original issue
discount or a below-market-rate loan pursuant to Sections 483, 1274 or 7872 of
the Code or any successor provisions thereto, provided, however, that the
interest rate shall not be less than the market rate that would otherwise be
available to the optionee or grantee from a third-party lender on the date of
exercise of the option or award, as determined by the Committee, or (iii) a
combination of cash, the optionee's or grantee promissory note and such shares.
The fair market value of such tendered shares shall be determined as provided in
Section 5 herein. The optionee's or grantee's promissory note shall be a full
recourse liability of the optionee and may, at the discretion of the Committee,
be secured by a pledge of the shares being purchased. Until such person has been
issued the shares subject to such exercise, he or she shall possess no rights as
a shareholder with respect to such shares.

8.   Stock Appreciation Rights.
------------------------------

     (a)  Grant. At the time of grant of an option or award under the Plan (or
          -----
at any other time), the Committee, in its discretion, may grant a Stock
Appreciation Right ("SAR") evidenced by an agreement in such form as the
Committee shall from time to time approve. Any such SAR may be subject to
restrictions on the exercise thereof as may be set forth in the agreement
representing such SAR, which agreement shall comply with and be subject to the
following terms and conditions and any additional terms and conditions
established by the Committee that are consistent with the terms of the Plan.

     (b)  Exercise. An SAR shall be exercised by the delivery to the Company of
          --------
a written notice which shall state that the holder thereof elects to exercise
his or her SAR as to the number of shares specified in the notice and which
shall further state what portion, if any, of the SAR

                                      -4-
<PAGE>

exercise amount (hereinafter defined) the holder thereof requests be paid to in
cash and what portion, if any, is to be paid in Common Stock of the Company. The
Committee promptly shall cause to be paid to such holder the SAR exercise amount
either in cash, in Common Stock of the Company, or any combination of cash and
shares as the Committee may determine. Such determination may be either in
accordance with the request made by the holder of the SAR or in the sole and
absolute discretion of the Committee. The SAR exercise amount is the excess of
the fair market value of one share of the Company's Common Stock on the date of
exercise over the per share exercise price in respect of which the SAR was
granted, multiplied by the number of shares as to which the SAR is exercised.
For the purposes hereof, the fair market value of the Company's shares of Common
Stock shall be determined as provided in Section 5 herein.

9.   Restricted Stock Awards.
----------------------------

     Awards of Common Stock subject to forfeiture and transfer restrictions may
be granted by the Committee. Any restricted stock award shall be evidenced by an
agreement in such form as the Committee shall from time to time approve, which
agreement shall comply with and be subject to the following terms and conditions
and any additional terms and conditions established by the Committee that are
consistent with the terms of the Plan:

     (a)  Grant of Restricted Stock Awards. Each restricted stock award made
          ---------------------------------
under the Plan shall be for such number of shares of Common Stock as shall be
determined by the Committee and set forth in the agreement containing the terms
of such restricted stock award. Such agreement shall set forth a period of time
during which the grantee must remain in the continuous employment of the Company
in order for the forfeiture and transfer restrictions to lapse. If the Committee
so determines, the restrictions may lapse during such restricted period in
installments with respect to specified portions of the shares covered by the
restricted stock award. The agreement may also, in the discretion of the
Committee, set forth performance or other conditions that will subject the
Common Stock to forfeiture and transfer restrictions. The Committee may, at its
discretion, waive all or any part of the restrictions applicable to any or all
outstanding restricted stock awards.

     (b)  Delivery of Common Stock and Restrictions. At the time of a restricted
          -----------------------------------------
stock award, a certificate representing the number of shares of Common Stock
awarded thereunder shall be registered in the name of the grantee. Such
certificate shall be held by the Company or any custodian appointed by the
Company for the account of the grantee subject to the terms and conditions of
the Plan, and shall bear such a legend setting forth the restrictions imposed
thereon as the Committee, in its discretion, may determine. The grantee shall
have all rights of a shareholder with respect to the Common Stock, including the
right to receive dividends and the right to vote such shares, subject to the
following restrictions: (i) the grantee shall not be entitled to delivery of the
stock certificate until the expiration of the restricted period and the
fulfillment of any other restrictive conditions set forth in the restricted
stock agreement with respect to such Common Stock; (ii) none of the shares of
Common Stock may be sold, assigned, transferred, pledged, hypothecated or
otherwise encumbered or disposed of during such restricted period or until after
the fulfillment of any such other restrictive conditions; and (iii) except as
otherwise

                                      -5-
<PAGE>

determined by the Committee, all of the Common Stock shall be forfeited and all
rights of the grantee to such Common Stock shall terminate, without further
obligation on the part of the Company, unless the grantee remains in the
continuous employment of the Company for the entire restricted period in
relation to which such shares of Common Stock were granted and unless any other
restrictive conditions relating to the restricted stock award are met. Any
Common Stock, any other securities of the Company and any other property (except
for cash dividends) distributed with respect to the Common Stock subject to
restricted stock awards shall be subject to the same restrictions, terms and
conditions as such restricted Common Stock.

     (c)  Termination of Restrictions. At the end of the restricted period and
          ---------------------------
provided that any other restrictive conditions of the restricted stock award are
met, or at such earlier time as otherwise determined by the Committee, all
restrictions set forth in the agreement relating to the restricted stock award
or in the Plan shall lapse as to the restricted Common Stock subject thereto,
and a stock certificate for the appropriate number of shares of Common Stock,
free of the restrictions and the restricted stock legend, shall be delivered to
the grantee or his beneficiary or estate, as the case may be.

10.  Performance Awards.
-----------------------

     The Committee is further authorized to grant performance awards
("Performance Award"). Subject to the terms of this Plan and any applicable
award agreement, Performance Awards granted under the Plan (i) may be
denominated or payable in cash, Common Stock (including, without limitation,
restricted stock), other securities, other awards, or other property and (ii)
shall confer on the holder thereof rights valued as determined by the Committee,
in its discretion, and payable to, or exercisable by, the holder of the
Performance Awards, in whole or in part, upon the achievement of such
performance goals during such performance periods as the Committee, in its
discretion, shall establish. Subject to the terms of this Plan and any
applicable award agreement, the performance goals to be achieved during any
performance period, the length of any performance period, the amount of any
Performance Awards granted, and the amount of any payment or transfer to be made
by the grantee and by the Company under any Performance Awards shall be
determined by the Committee.

11.  Income Tax Withholding and Tax Bonuses.
-------------------------------------------

     (a)  In order to comply with all applicable federal or state income tax
laws or regulations, the Company may take such action as it deems appropriate to
ensure that applicable federal or state payroll, withholding, income or other
taxes, which are the sole and absolute responsibility of an optionee or grantee
under the Plan, are withheld or collected from such optionee or grantee at the
required tax withholding rate. In order to assist an optionee or grantee in
paying all federal and state taxes to be withheld or collected upon exercise of
an option or award which does not qualify as an Incentive Stock Option
hereunder, the Committee, in its absolute discretion and subject to such
additional terms and conditions as it may adopt, shall permit the optionee or
grantee to satisfy such tax obligation by (i) electing to have the Company
withhold a portion of the shares otherwise to be delivered upon exercise of such
option or award

                                      -6-
<PAGE>

with a fair market value, determined in accordance with Section 5 herein, equal
to the required tax withholding or (ii) delivering to the Company Common Stock
other than the shares issuable upon exercise of such option or award with a fair
market value, determined in accordance with Section 5, equal to the required tax
withholding. The "required" tax withholding is the employer's minimum statutory
withholding based on minimum statutory withholding rates for federal and state
tax purposes, including employee payroll taxes, that are applicable to an
optionee's or grantee's taxable income generated upon exercise of an option or
award. Withholdings in excess of the required tax withholding are not allowed.

     (b)  The Committee shall have the authority, at the time of grant of an
option under the Plan or at any time thereafter, to approve tax bonuses to
designated optionees or grantees to be paid upon their exercise of options or
awards granted hereunder. The amount of any such payments shall be determined by
the Committee. The Committee shall have full authority in its absolute
discretion to determine the amount of any such tax bonus and the terms and
conditions affecting the vesting and payment thereafter.

12.  Additional Restrictions.
----------------------------

     The Committee shall have full and complete authority to determine whether
all or any part of the Common Stock of the Company acquired upon exercise of any
of the options or awards granted under the Plan shall be subject to restrictions
on the transferability thereof or any other restrictions affecting in any manner
the optionee's or grantee's rights with respect thereto, but any such
restriction shall be contained in the agreement relating to such options or
awards.

13.  Ten Percent Shareholder Rule.
---------------------------------

     Notwithstanding any other provision in the Plan, if at the time an option
is otherwise to be granted pursuant to the Plan the optionee owns directly or
indirectly (within the meaning of Section 424(d) of the Code) Common Stock of
the Company possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or its parent or subsidiary
corporations, if any (within the meaning of Section 422(b)(6) of the Code), then
any Incentive Stock Option to be granted to such optionee pursuant to the Plan
shall satisfy the requirements of Section 422(c)(5) of the Code, and the option
price shall be not less than 110% of the fair market value of the Common Stock
of the Company determined as described herein, and such option by its terms
shall not be exercisable after the expiration of five (5) years from the date
such option is granted.

14.  Non-Transferability.
------------------------

     No option may be sold, pledged, assigned, hypothecated, transferred, or
disposed of in any manner other than (i) by will or by the laws of descent or
distribution, or (ii) in the case of options that are not Incentive Stock
Options, to members of the optionee's immediate family or to one or more trusts
for the benefit of the optionee or members of his or her immediate family,

                                      -7-
<PAGE>

and the option may be exercised, during the lifetime of the Optionee, only by
the optionee or a permitted transferee.

15.  Dilution or Other Adjustments.
----------------------------------

     If there shall be any change in the Common Stock through merger,
consolidation, reorganization, recapitalization, dividend in the form of stock
(of whatever amount), stock split or other change in the corporate structure,
appropriate adjustments in the Plan and outstanding options and awards shall be
made by the Committee. In the event of any such changes, adjustments shall
include, where appropriate, changes in the aggregate number of shares subject to
the Plan, the number of shares and the price per share subject to outstanding
options and awards and the amount payable upon exercise of outstanding awards,
in order to prevent dilution or enlargement of option or award rights.

16.  Amendment or Discontinuance of Plan.
----------------------------------------

     The Board of Directors may amend or discontinue the Plan at any time.
Subject to the provisions of Section 15 no amendment of the Plan, however, shall
without shareholder approval: (i) increase the maximum number of shares under
the Plan as provided in Section 2 herein, (ii) decrease the minimum price
provided in Section 5 herein, (iii) extend the maximum term under Section 6, or
(iv) modify the eligibility requirements for participation in the Plan. The
Board of Directors shall not alter or impair any option or award theretofore
granted under the Plan without the consent of the holder of the option.

17.  Time of Granting.
---------------------

     Nothing contained in the Plan or in any resolution adopted or to be adopted
by the Board of Directors or by the shareholders of the Company, and no action
taken by the Committee or the Board of Directors (other than the execution and
delivery of an option or award agreement), shall constitute the granting of an
option or award hereunder.

18.  Effective Date and Termination of Plan.
-------------------------------------------

     (a)  The Plan was approved by the Board of Directors on June 29, 1990 and
shall be approved by the shareholders of the Company within twelve (12) months
thereof.

     (b)  Unless the Plan shall have been discontinued as provided in Section 16
hereof, the Plan shall terminate June 29, 2005. No option or award may be
granted after such termination, but termination of the Plan shall not, without
the consent of the optionee or grantee, alter or impair any rights or
obligations under any option or award theretofore granted.

                                      -8-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>5
<FILENAME>dex102.txt
<DESCRIPTION>1993 DIRECTOR'S STOCK OPTION PLAN AS AMENDED
<TEXT>
<PAGE>

                                                                    Exhibit 10.2

                            DIAMETRICS MEDICAL, INC.
                              AMENDED AND RESTATED
                       1993 DIRECTORS' STOCK OPTION PLAN
                           (as amended May 23, 2001)

     1.   Purpose of the Plan.  The purpose of this Diametrics Medical, Inc.
1993 Directors' Stock Option Plan is to attract and retain the best available
individuals for service as Directors of the Company and provide additional
incentive to the Outside Directors of the Company to serve as Directors.

     None of the options granted hereunder shall be "incentive stock options"
within the meaning of Section 422 of the Code (as hereinafter defined).

     2.   Definitions.  As used herein, the following definitions shall apply:

          (a) "Board" shall mean the Board of Directors of the Company.

          (b) "Code" shall mean the Internal Revenue Code of 1986, as amended.

          (c) "Common Stock" shall mean the Common Stock of the Company.

          (d) "Company" shall mean Diametrics Medical, Inc., a Minnesota
corporation.

          (e) "Continuous Status as a Director" shall mean the absence of any
interruption or termination of service as a Director.

          (f) "Director" shall mean a member of the Board.

          (g) "Employee" shall mean any person, including officers and
Directors, employed by the Company or any parent or Subsidiary of the Company.
The payment of a Director's fee by the Company shall not be sufficient in and of
itself to constitute "employment" by the Company.

          (h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

          (i) "Option" shall mean a stock option granted pursuant to the Plan.

          (j) "Option Value" shall mean, with respect to an option described in
Section 4(b)(iv) of the Plan, the value of such option determined on the date of
grant using the same methodology as was used by the Company's independent public
accountants to value stock options for the purposes of the Company's most recent
annual audited financial statements.

          (k) "Optioned Stock" shall mean the Common Stock subject to an Option.

                                      -1-
<PAGE>

          (l) "Optionee" shall mean an Outside Director who receives an Option.

          (m) "Outside Director" shall mean a Director who is not an Employee.

          (n) "Parent" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 425(e) of the Code.

          (o) "Plan" shall mean this 1993 Directors' Stock Option Plan.

          (p) "Shares" shall mean shares of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.

          (q) "Subsidiary" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 425(f) of the Code.

     3.   Stock Subject to the Plan.  Subject to the provisions of Section 10 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 467,500 Shares of Common Stock.  The Shares may be authorized,
but unissued, or reacquired Common Stock.

     If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan shall have been terminated, become available for future
grant under the Plan.  If Shares which were acquired upon exercise of an Option
are subsequently repurchased by the Company, such Shares shall not in any event
be returned to the Plan and shall not become available for future grant under
the Plan.

     4.   Administration of and Grants of Options under the Plan.

          (a) Administrator.  Except as otherwise required herein, the Plan
shall be administered by the Board.

          (b) Procedure for Grants.  The provisions set forth in this Section
4(b) shall not be amended more than once every six months, other than to comport
with changes in the Code, the Employee Retirement Income Security Act of 1974,
as amended, or the rules thereunder.  All grants of Options hereunder shall be
made in accordance with the following provisions:

              (i)  The Board shall have discretion to grant options to Outside
     Directors in addition to the Options described in Sections 4(b)(ii), (iii)
     and (iv) and to determine the number of Shares to be covered by such
     Options.

              (ii) Effective August 14, 1997, each Outside Director shall be
     automatically granted an Option (an "Initial Grant") to purchase 18,000
     Shares on the date on which such person first becomes a Director, whether
     through election by the shareholders of the Company or appointment by the
     Board of Directors to fill a vacancy.

                                      -2-
<PAGE>

     Options granted under this section 4(b)(ii) shall become vested and thereby
     exercisable with respect to 50% of such Initial Grant on the twelve month
     anniversary date of such Initial Grant and with respect to 25% at each
     successive anniversary date; provided, however, an unvested portion of an
     Initial Grant shall only vest so long as the Outside Director remains a
     Director on the date such portion vests.

           (iii)    Effective August 14, 1997, each Outside Director shall
     automatically receive, on the date of each Annual Meeting of Shareholders,
     an Option to purchase 8,000 Shares of the Company's Common Stock, such
     Option to become exercisable six months subsequent to the date of grant;
     provided however, that such Option shall only be granted to Outside
     Directors who have served since the date of the last Annual Meeting of
     Shareholders and will continue to serve after the date of grant of such
     Option.

           (iv)     Each Outside Director may elect, not later than the last day
     of the Company's fiscal year, to be granted Options in lieu of the
     compensation and fees otherwise payable to such Outside Director for the
     next fiscal year. Such Options shall be granted quarterly on the last day
     of each fiscal quarter in which such compensation and fees are earned, to
     be exercisable immediately. The number of Shares covered by each such
     Option shall be the number determined by dividing the total amount of
     compensation and fees payable at the end of such quarter by the Option
     Value of one such Share on the date of grant.

           (v)      The terms of an Option granted hereunder shall be as
          follows:

                    (A)  the term of the Option shall be ten (10) years.

                    (B)  the Option shall be exercisable only while the Outside
          Director remains a Director of the Company, except as set forth in
          Section 8 hereof.

                    (C)  the exercise price per Share shall be 100% of the fair
          value per Share on the date of grant of the Option.

                    (D)  to the extent necessary to comply with the applicable
          provisions of Rule 16b-3 promulgated under the Exchange Act ("Rule
          16b-3"), no Option will be exercisable until a date more than six
          months subsequent to the date of the grant of that Option.

          (c) Powers of the Board.  Subject to the provisions and restrictions
of the Plan, the Board shall have the authority, in its discretion: (i) to
determine, upon review of relevant information and in accordance with Section
7(b) of the Plan, the fair market value of the Common Stock; (ii) to determine
the exercise price per share of Options to be granted, which exercise price
shall be determined in accordance with Section 7(a) of the Plan; (iii) to
interpret the Plan; (iv) to prescribe, amend and rescind rules and regulations
relating to the Plan; (v) to authorize any person to execute on behalf of the
Company any instrument required to effectuate

                                      -3-
<PAGE>

the grant of an Option previously granted hereunder; and (vi) to make all other
determinations deemed necessary or advisable for the administration of the Plan.

          (d) Effect of Board's Decision.  All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.

     5.   Eligibility.  Options may be granted only to Outside Directors.  All
Options shall be automatically granted in accordance with the terms set forth in
Section 4(b) hereof.

     The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his directorship at any time.

     6.   Term of Plan.  The Plan shall become effective upon the earlier of (i)
its adoption by the Board or (ii) its approval by the shareholders of the
Company as described in Section 16 of the Plan.  It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 12 of the Plan.

     7.   Exercise Price and Consideration.

          (a) Exercise Price.  The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be 100% of the fair market value
per Share on the date of grant of the Option.

          (b) Fair Market Value.  The fair market value ("Fair Market Value") of
a Share shall be determined by the Board in its discretion; provided however,
that where there is a public market for the Common Stock, the fair market value
per Share shall be the closing price of the Common Stock in the over-the-counter
market on the date of grant, as reported in The Wall Street Journal (or, if not
so reported, as otherwise reported by the National Association of Securities
Dealers Automated Quotation ("NASDAQ") System) or, in the event the Common Stock
is traded on the NASDAQ National Market System or listed on a stock exchange,
the fair market value per Share shall be the closing price on such system or
exchange on the date of grant of the Option, as reported in The Wall Street
Journal.

          (c) Form of Consideration.  Subject to compliance with applicable
provisions of Section 16(b) of the Exchange Act, (or other applicable law), the
consideration to be paid for the Shares to be issued upon exercise of an Option,
including the method of payment, shall be determined by the Board and may
consist entirely of (i) cash, (ii) check, (iii) other Shares which (X) in the
case of Shares acquired upon exercise of an Option, have been owned by the
Optionee for more than six months on the date of surrender, and (Y) have a Fair
Market Value on the date of exercise equal to the aggregate exercise price of
the Shares as to which said Option shall be exercised, (iv) authorization for
the Company to retain from the total number of Shares as to which the Option is
exercised that number of Shares having a Fair Market Value on the date of
exercise equal to the exercise price for the total number of Shares as to which
the Option is exercised, (v) delivery of a properly executed exercise notice
together with irrevocable

                                      -4-
<PAGE>

instructions to a broker to promptly deliver to the Company the amount of sale
or loan proceeds required to pay the exercise price, (vi) by delivering an
irrevocable subscription agreement for the Shares which irrevocably obligates
the option holder to take and pay for the Shares not more than twelve months
after the date of delivery of the subscription agreement, (vii) any combination
of the foregoing methods of payment or (viii) such other consideration and
method of payment for the issuance of Shares as may be permitted under
applicable laws. In making its determination as to the type of consideration to
accept, the Board shall consider whether acceptance of such consideration may be
reasonably expected to benefit the Company.

     8.   Exercise of Option.

          (a) Procedure for Exercise; Rights as a Shareholder.  Any Option
granted hereunder shall be exercisable at such times as are set forth in Section
4(b) hereof; provided however, that no Options shall be exercisable until
shareholder approval of the Plan in accordance with Section 16 hereof has been
obtained.

     An Option may not be exercised for a fraction of a Share.

     An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company.  Full payment may consist of any consideration and method of payment
allowable under Section 7(c) of the Plan.  Until the issuance (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock certificate evidencing such Shares,
no right to vote or receive dividends or any other rights as a shareholder shall
exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option.  A share certificate for the number of Shares so acquired shall be
issued to the Optionee as soon as practicable after exercise of the Option.  No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 10 of the Plan.

     Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

          (b) Termination of Status as a Director.  If an Outside Director
ceases to serve as a Director, he may, but only within seven (7) months after
the date he ceases to be a Director of the Company, exercise his Option to the
extent that he was entitled to exercise it at the date of such termination.  To
the extent that he was not entitled to exercise an Option at the date of such
termination, or if he does not exercise such Option (which he was entitled to
exercise) within the time specified herein, the Option shall terminate.

          (c) Disability of Optionee.  Notwithstanding the provisions of Section
8(b) above, in the event an Optionee is unable to continue his service as a
Director with the Company as a result of his total and permanent disability (as
defined in Section 22(e)(3) of the Code) he

                                      -5-
<PAGE>

may, but only within seven (7) months from the date of termination, exercise his
Option to the extent he was entitled to exercise it at the date of such
termination. To the extent that he was not entitled to exercise the Option at
the date of termination, or if he does not exercise such Option (which he was
entitled to exercise) within the time specified herein, the Option shall
terminate.

       (d)  Death of Optionee.  Notwithstanding the provisions of Section
4(b), in the event of the death of an Optionee:

            (i)  during the term of the Option who is at the time of his death a
     Director of the Company and who has been in Continuous Status as a Director
     since the date of grant of the Option, the Option may be exercised, at any
     time within seven (7) months following the date of death, by the Optionee's
     estate or by a person who acquired the right to exercise the Option by
     bequest or inheritance, but only to the extent of the right to exercise
     that would have accrued had the Optionee continued living and remained in
     Continuous Status as a Director for six (6) months after the date of death;
     or

            (ii) within thirty (30) days after the termination of Continuous
     Status as a Director, the Option may be exercised, at any time within seven
     (7) months following the date of death, by the Optionee's estate or by a
     person who acquired the right to exercise the Option by bequest or
     inheritance, but only to the extent of the right to exercise that had
     accrued at the date of termination.

     9.   Non-Transferability of Options.  The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than (i)
by will, (ii) by the laws of descent or distribution, (iii) to members of the
Optionee's immediate family or (iv) to one or more trusts for the benefit of the
Optionee or members of his or her immediate family, and the Option may be
exercised, during the lifetime of the Optionee, only by the Optionee or a
permitted transferee.

     10.  Adjustments Upon Changes in Capitalization, Dissolution or Merger.

          (a) In the event that the number of outstanding shares of Common Stock
of the Company is changed by a stock dividend, stock split, reverse stock split,
combination, reclassification or similar change in the capital structure of the
Company without consideration, the number of Shares available under this Plan
and the number of Shares subject to outstanding Options and the exercise price
per share of such Options shall be proportionately adjusted, subject to any
required action by the Board or shareholders of the Company and compliance with
applicable securities laws; provided however, that no certificate or scrip
representing fractional shares shall be issued upon exercise of any Option and
any resulting fractions of a Share shall be ignored.  Such adjustment shall be
made by the Board, whose determination in that respect shall be final, binding
and conclusive.

          (b) In the event of a dissolution or liquidation of the Company, a
merger in which the Company is not the surviving corporation, a transaction or
series of related transactions in which 100% of the then outstanding voting
stock is sold or otherwise transferred,

                                      -6-
<PAGE>

or the sale of substantially all of the assets of the Company, any or all
outstanding Options shall, notwithstanding any contrary terms of the written
agreement governing such Option, accelerate and become exercisable in full at
least ten days prior to (and shall expire on) the consummation of such
dissolution, liquidation, merger or sale of stock or sale of assets on such
conditions as the Board shall determine unless the successor corporation assumes
the outstanding Options or substitutes substantially equivalent options.

     11.  Time of Granting Options.  The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4(b) hereof.
Notice of the determination shall be given to each Outside Director to whom an
Option is so granted within a reasonable time after the date of such grant.

     12.  Amendment and Termination of the Plan.

          (a)  Amendment and Termination.  The Board may at any time amend,
alter, suspend, or discontinue the Plan, but no amendment, alteration,
suspension, or discontinuance shall be made which would impair the rights of any
Optionee under any grant theretofore made, without his or her consent.  In
addition, to the extent necessary and desirable to comply with Rule 16b-3 under
the Exchange Act (or any other applicable law or regulation), the Company shall
obtain shareholder approval of any Plan amendment in such a manner and to such a
degree as required.

          (b)  Effect of Amendment or Termination.  Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.

     13.  Conditions Upon Issuance of Shares.  Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.

     As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares, if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.

     Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect

                                      -7-
<PAGE>

of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

     14.  Reservation of Shares.  The Company, during the term of this Plan,
will at all times reserve and keep available such number of the Shares available
for issuance pursuant to this Plan as shall be sufficient to satisfy the
requirements of the Plan.

     15.  Option Agreement.  Options shall be evidenced by written option
agreements in such form as the Board shall approve.

     16.  Shareholder Approval.

          (a) The Plan shall be subject to approval by the shareholders of the
Company within twelve (12) months of its adoption by the Board.  If such
shareholder approval is obtained at a duly held shareholders' meeting, it may be
obtained by the affirmative vote of the holders of a majority of the outstanding
shares of the Company present or represented and entitled to vote thereon.  If
such shareholder approval is obtained by written consent, it may be obtained by
the written consent of the holders of a majority of the outstanding shares of
the Company.

          (b) Any required approval of the shareholders of the Company shall be
substantially in accordance with Section 14(a) of the Exchange Act and the rules
and regulations promulgated thereunder.

     17.  Information to Optionees.  The Company shall provide to each Optionee,
during the period for which such Optionee has one or more Options outstanding,
copies of all annual reports to shareholders, proxy statements and other
information provided to all shareholders of the Company.

                                      -8-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>6
<FILENAME>dex103.txt
<DESCRIPTION>1995 EMPLOYEE STOCK PURCHASE PLAN AS AMENDED
<TEXT>
<PAGE>

                                                                    Exhibit 10.3
                           DIAMETRICS MEDICAL, INC.
                       1995 EMPLOYEE STOCK PURCHASE PLAN
                           (as amended May 23, 2001)


                            ARTICLE I. INTRODUCTION

     Section 1.01. Purpose. The purpose of the Diametrics Medical, Inc. 1995
Employee Stock Purchase Plan (the "Plan") is to provide employees of Diametrics
Medical, Inc., a Minnesota corporation (the "Company"), and certain related
corporations with an opportunity to share in the ownership of the Company by
providing them with a convenient means for regular and systematic purchases of
the Company's Common Stock, par value $.01 per share, and, thus, to develop a
stronger incentive to work for the continued success of the Company.

     Section 1.02. Rules of Interpretation. It is intended that the Plan be an
"employee stock purchase plan" as defined in Section 423(b) of the Internal
Revenue Code of 1986, as amended (the "Code"), and Treasury Regulations
promulgated thereunder. Accordingly, the Plan shall be interpreted and
administered in a manner consistent therewith if so approved. All Participants
in the Plan will have the same rights and privileges consistent with the
provisions of the Plan.

     Section 1.03. Definitions. For purposes of the Plan, the following terms
will have the meanings set forth below:

          (a)  "Acceleration Date" means the earlier of the date of shareholder
     approval or approval by the Company's Board of Directors of (i) any
     consolidation or merger of the Company in which the Company is not the
     continuing or surviving corporation or pursuant to which shares of Company
     Common Stock would be converted into cash, securities or other property,
     other than a merger of the Company in which shareholders of the Company
     immediately prior to the merger have the same proportionate ownership of
     stock in the surviving corporation immediately after the merger; (ii) any
     sale, exchange or other transfer (in one transaction or a series of related
     transactions) of all or substantially all of the assets of the Company; or
     (iii) any plan of liquidation or dissolution of the Company.

          (b)  "Affiliate" means any subsidiary corporation of the Company, as
     defined in Section 424(f) of the Code, whether now or hereafter acquired or
     established.

          (c)  "Committee" means the committee described in Section 10.01.

          (d)  "Company" means Diametrics Medical, Inc., a Minnesota
     corporation, and its successors by merger or consolidation as contemplated
     by Article XI herein.

          (e)  "Current Compensation" means all regular base wage or salary
     payments paid by the Company to a Participant in accordance with the terms
     of his or her employment, but excluding annual bonus payments and all other
     forms of special compensation.

          (f)  "Fair Market Value" as of a given date means such value of the
     Common Stock as reasonably determined by the Committee, but shall not be
     less than (i) the closing price of the Common Stock as reported for
     composite transactions if the Common Stock is then traded on a national
     securities exchange, (ii) the last sale price if the Common Stock is then
     quoted on the NASDAQ National Market System, or (iii) the average of the
     closing representative bid and asked prices of the Common Stock as reported
     on NASDAQ on the date as of which the fair market value is being
     determined. If on a given date the Common Stock are not traded on an
     established securities market, the Committee shall make a good faith
     attempt to satisfy the requirements of this Section 1.03 and in connection
     therewith shall take such action as it deems necessary or advisable.
<PAGE>

          (g)  "Full-Time Employee" means an employee of the Company or a
     Participating Affiliate as of the first day of a Purchase Period who has
     worked for the company for at least 90 days, including an officer or
     director who is also an employee, but excluding an employee whose customary
     employment is less than 20 hours per week, provided, however, that for the
     initial Purchase Period, all employees whose customary employment exceeds
     20 hours per week shall be eligible to participate regardless of the number
     of days they have been employed by the Company.

          (h)  "Participant" means a Full-Time Employee who is eligible to
     participate in the Plan under Section 2.01 and who has elected to
     participate in the Plan.

          (i)  "Participating Affiliate" means an Affiliate which has been
     designated by the Committee in advance of the Purchase Period in question
     as a corporation whose eligible Full-Time Employees may participate in the
     Plan.

          (j)  "Plan" means the Diametrics Medical, Inc. 1995 Employee Stock
     Purchase Plan, as amended, the provisions of which are set forth herein.

          (k)  "Purchase Period" means the approximate 3-month periods beginning
     on the first business day in January, April, July and October of each year
     and ending on the last business day in the following March, June, September
     and December, respectively; provided that the initial Purchase Period will
     commence on July 3, 1995 and will terminate on September 29, 1995.

          (l)  "Common Stock" means the Company's Common Stock, $.01 par value,
     as such stock may be adjusted for changes in the Company as contemplated by
     Article XI herein.

          (m)  "Stock Purchase Account" means the account maintained on the
     books and records of the Company recording the amount received from each
     Participant through payroll deductions made under the Plan.

                   ARTICLE II. ELIGIBILITY AND PARTICIPATION

     Section 2.01. Eligible Employees. All Full-Time Employees shall be eligible
to participate in the plan beginning on the first day of the first Purchase
Period to commence after such person becomes a Full-Time Employee. Subject to
the provisions of Article VI, each such employee will continue to be eligible to
participate in the Plan so long as he or she remains a Full-Time Employee.

     Section 2.02. Election to Participate. An eligible Full-Time Employee may
elect to participate in the Plan for a given Purchase Period by filing with the
Company, in advance of that Purchase Period and in accordance with such terms
and conditions as the Committee in its sole discretion may impose, a form
provided by the Company for such purpose which authorizes regular payroll
deductions from Current Compensation beginning with the first payday in that
Purchase Period and continuing until the employee withdraws from the Plan or
ceases to be eligible to participate in the Plan.

     Section 2.03. Limits on Stock Purchase. No employee shall be granted any
right to purchase Common Stock hereunder if such employee, immediately after
such right to purchase is granted, would own, directly or indirectly, within the
meaning of Section 423(b)(3) and Section 424(d) of the Code, Common Stock
possessing 5% or more of the total combined voting power or value of all the
classes of the capital stock of the Company or all Affiliates.

     Section 2.04. Voluntary Participation. Participation in the Plan on the
part of a Participant is voluntary and such participation is not a condition of
employment nor does participation in the Plan entitle a Participant to be
retained as an employee.

                                      -2-
<PAGE>

                   ARTICLE III. PAYROLL DEDUCTIONS, COMPANY
                   CONTRIBUTIONS AND STOCK PURCHASE ACCOUNT

     Section 3.01. Deduction from Pay. The form described in Section 2.02 will
permit a Participant to elect payroll deductions of any multiple of 1% but not
less than 1% or more than 10% of such Participant's Current Compensation for
each pay period, subject to such other limitations as the Committee in its sole
discretion may impose. A Participant may cease making payroll deductions at any
time, subject to such limitations as the Committee in its sole discretion may
impose.

     Section 3.02. Credit to Account. Payroll deductions will be credited to
the Participant's Stock Purchase Account on each payday, and Company
contributions will be credited to the Participant's Stock Purchase Account on
the last business day of the Purchase Period at the time of and in connection
with the purchase of shares of Common Stock in accordance with Article IV and V
hereof.

     Section 3.03. Interest. No interest will be paid upon payroll deductions,
Company contributions or on any amount credited to, or on deposit in, a
Participant's Stock Purchase Account.

     Section 3.04. Nature of Account. The Stock Purchase Account is established
solely for accounting purposes, and all amounts credited to the Stock Purchase
Account will remain part of the general assets of the Company or the
Participating Affiliate (as the case may be).

     Section 3.05. No Additional Contributions. A Participant may not make any
payment into the Stock Purchase Account other than the payroll deductions made
pursuant to the Plan.

                     ARTICLE IV. RIGHT TO PURCHASE SHARES

     Section 4.01. Number of Shares. Each Participant will have the right to
purchase on the last business day of the Purchase Period all, but not less than
all, of the largest number of whole shares of Common Stock that can be purchased
at the price specified in Section 4.02 with the entire credit balance in the
Participant's Stock Purchase Account, subject to the limitations that (a) no
more than 2,000 shares of Common Stock may be purchased under the Plan by any
one Participant for a given Purchase Period and (b) in accordance with Section
423 (b)(8) of the Code, no more than $25,000 in Fair Market Value (determined at
the beginning of each Purchase Period) of Common Stock and other stock may be
purchased under the Plan and all other employee stock purchase plans (if any) of
the Company and the Affiliates by any one Participant for any calendar year. If
the purchases for all Participants would otherwise cause the aggregate number of
shares of Common Stock to be sold under the Plan to exceed the number specified
in Section 10.03, each Participant shall be allocated a pro rata portion of the
Common Stock to be sold.

     Section 4.02. Purchase Price. The purchase price for any Purchase Period
shall be the lesser of (a) 85% of the Fair Market Value of the Common Stock on
the first business day of that Purchase Period or (b) 85% of the Fair Market
Value of the Common Stock on the last business day of that Purchase Period, in
each case rounded up to the next higher full cent.

                         ARTICLE V. EXERCISE OF RIGHT

     Section 5.01. Purchase of Stock. On the last business day of a Purchase
Period, the entire credit balance in each Participant's Stock Purchase Account
will be used to purchase the largest number of whole shares of Common Stock
purchasable with such amount (subject to the limitations of Section 4.01),
unless the Participant has filed with the Company, in advance of that date and
subject to such terms and conditions as the Committee in its sole discretion may
impose, a form provided by the Company which requests the distribution of the
entire credit balance in cash.

     Section 5.02. Cash Contributions. Any amount remaining in a Participant's
Stock Purchase Account after the last business day of a Purchase Period will be
paid to the Participant in cash within 30 days after the end of that Purchase
Period.

                                      -3-
<PAGE>

     Section 5.03. Notice of Acceleration Date. The Company shall use its best
efforts to notify each Participant in writing at least ten days prior to any
Acceleration Date that the then current Purchase Period will end on such
Acceleration Date.

                ARTICLE VI. WITHDRAWAL FROM PLAN: SALE OF STOCK

     Section 6.01. Voluntary Withdrawal. A Participant may, in accordance with
such terms and conditions as the Committee in its sole discretion may impose,
withdraw from the Plan and cease making a payroll deductions by filing with the
Company a form provided for this purpose. In such event, the entire credit
balance in the Participant's Stock Purchase Account will be paid to the
Participant in cash within 30 days. A Participant who withdraws from the Plan
will not be eligible to reenter the Plan until the beginning of the next
Purchase Period following the date of such withdrawal.

     Section 6.02. Death. Subject to such terms and conditions as the Committee
in its sole discretion may impose, upon the death of a Participant, no further
amounts shall be credited to the Participant's Stock Purchase Account.
Thereafter, on the last business day of the Purchase Period during which such
Participant's death occurred and in accordance with Section 5.01, the entire
credit balance in such Participant's Stock Purchase Account will be used to
purchase Common Stock, unless such Participant's estate has filed with the
Company, in advance of that day and subject to such terms and conditions as the
Committee in its sole discretion may impose, a form provided by the Company
which elects to have the entire credit balance in such Participant's Stock
Account distributed in cash within 30 days after the end of that Purchase Period
or at such earlier time as the Committee in its sole discretion may decide. Each
Participant, however, may designate one or more beneficiaries who, upon death,
are to receive the Common Stock or the amount that otherwise would have been
distributed or paid to the Participant's estate and may change or revoke any
such designation form time to time. No such designation, change or revocation
will be effective unless made by the Participant in writing and filed with the
Company during the Participant's lifetime. Unless the Participant has otherwise
specified the beneficiary designation, the beneficiary or beneficiaries so
designated will become fixed as of the date of the death of the Participant so
that, if a beneficiary survives the Participant but dies before the receipt of
the payment due such beneficiary, the payment will be made to such beneficiary's
estate.

     Section 6.03. Termination of Employment. Subject such terms and conditions
as the Committee in its sole discretion may impose, upon a Participant's normal
or early retirement with the consent of the Company under any pension or
retirement plan of the Company or Participating Affiliate, no further amounts
shall be credited to the Participant's Stock Purchase Account. Thereafter, on
the last business day of the Purchase Period during which such Participant's
approved retirement occurred and in accordance with Section 5.01, the entire
credit balance in such Participant's Stock Purchase Account will be used to
purchase Common Stock, unless such Participant has filed with Company, in
advance of that day and subject to such terms and conditions as the committee in
its sole discretion may impose, a form provided by the Company which elects to
receive the entire credit balance in such Participant's Stock Purchase Account
in cash within 30 days after the end of that Purchase Period, provided that such
Participant shall have no right to purchase Common Stock in the event that the
last day of such a Purchase Period occurs more than three months following the
termination of such Participates employment with Company by reason of such an
approved retirement. In the event of any other termination of employment (other
than death) with the Company or a participating Affiliate, participation the
Plan will cease on the date the Participant ceases to be a Full-Time Employee
for any reason. In such event, the entire credit balance in such Participant's
Stock Purchase Account will be paid to the Participant in cash within 30 days.
For purposes of this Section 6.03, a transfer of employment to any Affiliate, or
a leave of absence which has been approved by the Committee, will not be deemed
a termination of employment as a Full-Time Employee.

                       ARTICLE VII. NON-TRANSFERABILITY

     Section 7.01. Nontransferable Right to Purchase. The right to purchase
Common Stock hereunder may not be assigned, transferred, pledged or hypothecated
(whether by operation of law or otherwise), except as provided in Section 6.02,
and will not be subject to execution, attachment or similar process. Any
attempted assignment, transfer, pledge, hypothecation or other disposition or
levy of attachment or similar process upon the right to purchase will be null
and void and without effect.

                                      -4-
<PAGE>

     Section 7.02. Nontransferable Account. as provided in Section 6.02, the
amounts credited to a Stock Purchase Account may not be assigned, transferred,
pledged or hypothecated in any way, and any attempted assignment, transfer,
pledge, hypothecation or other disposition of such amounts will be null and void
and without effect.

                       ARTICLE VIII. STOCK CERTIFICATES

     Section 8.01. Delivery. Promptly after the last day of each Purchase
Period and subject to such terms and conditions as the Committee in its sole
discretion may impose, the Company will cause to be delivered to or for the
benefit of the Participant a certificate representing the Common Stock purchased
on the last business day of such Purchase Period.

     Section 8.02. Securities Laws. The Company shall not be required to issue
or deliver any certificate representing Common Stock prior to registration under
the Securities Act of 1933, as amended, or registration or qualification under
any state law if such registrations required. The Company shall use its best
efforts to accomplish such registration (if and to the extent required) not
later than a reasonable time following the Purchase Period, and delivery of
certificates may be deferred until such registration is accomplished.

     Section 8.03. Completion of Purchase. A Participant shall have no interest
in the Common Stock purchased until a certificate representing the same is
issued to or for the benefit of the Participant.

     Section 8.04. Form of Ownership. The certificates representing Common
Stock issued under the Plan will be registered in the name of the Participant or
jointly in the name of the Participant and another person, as the Participant
may direct on a form provided by the Company.

         ARTICLE IX. EFFECTIVE DATE AMENDMENT AND TERMINATION OF PLAN

     Section 9.01. Effective Date. The Plan was approved by the Board of
Directors of the Company on April 19, 1995, and will be approved by the
shareholders within 12 months of such date.

     Section 9.02. Plan Commencement. The initial Purchase Period under the Plan
will commence on July 3,1995. Thereafter each succeeding Purchase Period will
commence and terminate in accordance with Section 1.03(k).

     Section 9.03. Powers of Board. The Board of Directors may amend or
discontinue the Plan at any time. No amendment or discontinuation of the Plan,
however, shall without shareholder approval be made that (i) absent such
shareholder approval, would cause Rule 16b-3 under the Securities Exchange Act
of 1934, as amended (the "Act") to become unavailable with respect to the Plan,
(ii) requires shareholder approval under any rules or regulations of the
National Association of Securities Dealers, Inc. or any securities exchange that
are applicable to the Company, or (iii) permit the issuance of Common Stock
before payment therefor in full.

     Section 9.04. Automatic Termination. The Plan shall automatically terminate
when all of the shares of Common Stock provided for in Section 10.03 have been
sold.

                           ARTICLE X. ADMINISTRATION

     Section 10.01. The Committee. The Plan shall be administered by a committee
(the "Committee") of two or more directors of the none of whom shall be officers
or employees of the Company and all of whom shall be "disinterested persons"
with respect to the Plan within the meaning of Rule 16b-3 under the Act. The
members of the committee shall be appointed by and serve at the pleasure of the
Board of Directors.

     Section 10.02. Powers of Committee. Subject to the provisions of the Plan,
the Committee shall have full authority to administer the plan, including
authority to interpret and construe any provision of the Plan, to establish
deadlines by which the various administrative forms must be received in order to
be effective, and to adopt such other rules and regulations for administrating
the Plan as it may deem appropriate. The Committee shall have full

                                      -5-
<PAGE>

and complete authority to determine whether all or any part of the Common Stock
acquired pursuant to the Plan shall be subject to restriction on the
transferability thereof or any other restrictions affecting in any manner a
Participant's rights with respect thereto but any such restrictions shall be
contained in the form by which a Participant elects to participate in the Plan
pursuant to Section 2.02. Decisions of the Committee will be final and binding
on all parties who have an interest in the Plan.

     Section 10.03. Stock to be Sold. The Common Stock to be issued and sold
under the Plan may be treasury shares or authorized but unissued shares, or the
Company may purchase Common Stock in the market for sale under the Plan. Except
as provided in Section 11.01, the aggregate number of shares of Common Stock to
be sold under the Plan will not exceed 400,000 shares.

     Section 10.04. Notices. Notices to the Committee should be addressed as
follows:

     Compensation Committee

     Diametrics Medical, Inc.

     2658 Patton Road

     Roseville, Minnesota 55113



            ARTICLE XI. ADJUSTMENT FOR CHANGES IN STOCK OR COMPANY

     Section 11.01. Stock dividend or Reclassification. If the outstanding
shares of Common Stock are increased, decreased, changed into or exchanged for a
different number or kind of securities of the Company, or shares of a different
par value or without par value, through reorganization, recapitalization,
reclassification, stock dividend, stock split, amendment to the Company's
certificate of Incorporation, reverse stock split or otherwise, and appropriate
adjustment shall be made in the maximum numbers and kind of securities to be
purchased under the Plan with a corresponding adjustment in the purchase price
to be paid therefor.

     Section 11.02. Merger or Consolidation. If the Company is merged into or
consolidated with one or more corporations during the term of the Plan,
appropriate adjustments will be made to give effect thereto on an equitable
basis in terms of issuance of shares of the corporation surviving the merger or
of the consolidated corporation, as the case may be.

                          ARTICLE XII. APPLICABLE LAW

Rights to purchase Common Stock granted under the Plan shall be construed and
shall take effect in accordance with the laws of the State of Minnesota.

                                      -6-

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